Supply chain management refers, generally, to managing commerce (e.g., product shipments) between a manufacturer, various intermediaries, such as distribution centers, wholesalers and the like, and customers.
Standard supply chain manufacturing business-to-business transactions are automated using software on the customer side and supplier side. In a standard transaction, the customer releases, to the supplier, long-term forecasts of delivery dates and quantities of product that are within the scope of existing contracts. The customer also releases new or modified short-term delivery date and product quantity requirements that are within the scope of existing contracts.
Upon receiving the requirements, the supplier's system adds new or modified long-term and short-term requirements to its due delivery schedule for the supplier's customers and products. The supplier's system then schedules non-committed production time of resources and examines its inventory to meet the new delivery requirements.
In many manufacturing enterprises, software performs the scheduling due to the complexity of the production requirements and resources. Typically, this involves two people: one person to run the production scheduling software with new delivery schedules and another person to negotiate with the customer when due dates cannot be met. The output of the scheduling is an updated master production schedule.
Next, the supplier's manufacturing resource planner (MRP) software generates new detailed production requirements from the updated master production schedule. After the production requirements are generated, the MRP software allocates and dispatches production resources to manufacture the products according to the production requirements. The finished products are sent to the customer along with advanced shipping notifications (ASN).
A problem with standard transactions is that two or more people (on the supplier side) are kept busy controlling the production scheduling software and negotiating with the customer. By way of example, the production scheduling software may report to the supplier that its newly created schedule will not completely satisfy a customer's new requirements. In this case, a person at the supplier communicates the problem to the customer and negotiates either to relax the customer's requirements or to cancel orders. This problem is particularly important in certain industries where the supplier has the power to propose a schedule that deviates from the customer's preferred delivery schedule.
The supplier's people are also kept busy determining when a new delivery schedule from the customer is eligible for consideration by the supplier and/or if the deviations of the new schedule from a most recently confirmed delivery schedule are sufficiently substantial and abrupt to indicate problems in a communication with the customer.